Monitise seals $13 mln mobile money deal with Visa

By Georgina Prodhan

LONDON (Reuters) - Mobile banking and payments service provider Monitise has signed a five-year strategic agreement with Visa International worth $13 million (7.9 million pounds), it said on Tuesday, lifting its shares.

Monitise said Visa International, the world's largest retail electronic payments network, would also subscribe to a rights issue of 73.2 million new shares to raise 5.1 million pounds, giving it 14.4 percent of the company.

Monitise shares were up 19 percent to 6.30 pence by 1:50 p.m., outperforming a flat London stock market -- below the 7 pence-per-share price of the new shares.

"Today's announcement provides a major boost to Monitise's short-term revenue visibility and long-term strategic position," Investec analyst Gareth Evans wrote in a note, reiterating his "buy" recommendation and 10 pence price target on the stock.

Investec acts as a broker and adviser to Monitise.

Under the deal, Visa will pay Monitise $13 million to help it develop technology to provide SMS alerts and secure payment mechanisms for holders of Visa's roughly 2 billion cards worldwide -- plus licence, service and development fees.

"There's a whole raft of things you'll be able to do with your phone in the years to come that you can do with your card now," Monitise Chief Executive Alastair Lukies told Reuters in a telephone interview.

Existing shareholders UBS Global Asset Management and Capital Group will also participate in the capital hike, keeping their stakes at 12.9 percent and 5.8 percent respectively.